A recent disclosure to Companies House in the UK highlights the value that businesses can derive from taking out cyber insurance cover, a cyber risk expert has said.
Christian Toon of Pinsent Masons was commenting after the Law Gazette reported how the company behind conveyancing firm Simplify was able to recover the majority of costs the company attributed to a cyber incident in 2021 from its insurance provider. The Law Gazette’s report followed its analysis of annual accounts filed by UKLS Acquisitions Limited for the year ending 31 March 2022.
The accounts reveal exceptional costs of almost £7.3 million arising primarily from a cyber attack on Simplify in November 2021, that the company was able to make a successful claim to its insurers in relation to the incident, and that the amount it recovered in relation to the incident was nearly £6.8m.
The Law Gazette’s report comes at a time when there is growing scrutiny of the cyber insurance market. In the most recent example of this, the Federation of European Risk Management Associations told the Financial Times that it is concerned that cyber insurance may become “an unviable product for many organisations”. The body is seeking “a more collaborative approach to cyber balancing the risk appetite of the insurance market with the coverage requirements of the corporate buyers”.
Toon said businesses need to understand whether the policies on offer cover the specific risks they face, as well as the risks associated with taking out such policies, such as gaps in coverage and its cost. However, he said the Simplify example highlights how it can be a worthwhile investment for some businesses.
“Cyber insurance can be a valuable tool for protecting your business or personal assets from a variety of cyber-related risks, such as data breaches, malware, and cyber extortion,” Toon said. “However, the decision of whether or not to purchase cyber insurance depends on a number of factors, including the size and nature of your organisation, the type of data you handle, and your overall risk management strategy.”
“If you are concerned about the potential risks associated with cyber attacks and data breaches, it may be worth considering cyber insurance to help protect business and your stakeholders,” he said.
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